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Us TMT 2022 Semiconductor Outlook
Us TMT 2022 Semiconductor Outlook
industry outlook
2022 semiconductor industry outlook 2022 semiconductor industry outlook
In 2022, the global semiconductor chip industry is expected to Semi companies have also been making strides in their efforts
The chip shortage continues, as production will take time to catch up to demand 4 reach about US$600 billion.1 But while it’s still dwarfed by farming, at greater diversity, equity, inclusion, and sustainability. They are
oil and gas—industries that are worth an annual US$10 trillion and becoming more diverse and inclusive (specifically narrowing the
US$5 trillion in revenue, respectively—80% of the world’s food or gender gap5) and are committing to reducing their environmental
The hunt for silicon talent intensifies 5 fuel doesn’t come from a handful of manufacturers concentrated footprint. Interestingly, the sector’s biggest challenge may be water
in a just a few countries. usage,6 although improving their energy use is also a focus area.7
The move to localize chip manufacturing gains momentum 6 Across multiple end markets, the absence of a single critical chip, Over the long run, semiconductor revenues are likely to oscillate
often costing less than a dollar, can prevent the sale of a device around a trend line. Still, that trend line looks steeper than ever
worth tens of thousands of dollars. Based on our analysis, the chip before as we enter a period of robust secular growth.
Digital transformation efforts accelerate 7 shortage of the past two years resulted in revenue misses of more
• We expect the global industry to grow 10% in 2022 to over
than US$500 billion worldwide between the semiconductor and its
US$600 billion for the first time ever. Growth will likely be down
customer industries, with lost auto sales of more than US$210 billion
from 25% growth in 2021, in line with the Semiconductor Industry
Signposts for the future 8 in 2021 alone.2
Association and World Semiconductor Trade Statistics.8 Chips will
be even more important across all industries, driven by increasing
Although annual semiconductor sales have traditionally trended
semiconductor content in everything from cars to appliances to
upward, they have also demonstrated a characteristic cyclicality,
factories, in addition to the usual suspects—computers, data
with periods of growth and contraction. In contrast, the growth
centers, and phones.
in chip criticality has been a steady one that may even accelerate.
Two factors are driving this trend. First, more and more products • We expect shortages and supply chain issues to remain front and
have at least some chips integrated into their design every year, center for the first half of the year, hopefully easing by the back
and more and more products have more chips than they used to, half, but with longer lead times for some components stretching
from connected devices in our homes to smart tags on every box into 2023, possibly well into 2023.
in a warehouse. That’s not all; chips are also rising in their value
• The ongoing talent shortage will be made even more severe by
and capabilities. For example, the semi content per car will roughly
the addition of increased semiconductor manufacturing facilities
double between 2013 and 2030.3
outside Taiwan, China, and South Korea. The higher demand
for software skills required to program and integrate chips into
Although shortages have been painful for some customers, the chip
fast-growing markets such as electric vehicles, robotics, home
industry itself is thriving. The Philadelphia Semiconductor Index
automation, artificial intelligence, and 5G, as well as part of the
(SOX) is up 117% in the past two years,4 while the Nasdaq has only
shift from fossil fuels to green energy, will further exacerbate the
been up 90%. Revenues, earnings, and cash flow are strong for chip
shortage, and there is also an overall labor shortage.
companies, allowing for ongoing investment in new plants, new
business models, and accelerated digital transformation. • Finally, we expect the digital transformation within the industry to
continue and accelerate. Nearly three out of five chip companies
have already begun their transformation journey. Still, over half of
those are modifying their transformation process as they go, in
About outlooks
response to various pressures.9
Deloitte’s 2022 semiconductor industry outlook seeks to identify the strategic issues and opportunities for semiconductor companies to consider in
the coming year, including their impacts, key actions to take, and critical questions to ask. The goal is to equip US semiconductor (aka semi or chip)
companies with the information and foresight they need to position themselves for a robust and resilient future.
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Global Leading Market Research Publisher
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2022 semiconductor industry outlook 2022 semiconductor industry outlook
• Lead times for chips: 12 weeks is about average, so • Wage inflation: The ongoing talent war continues to see
moving toward that level is a key goal before the end companies struggle to fill positions. Compensation has
of the year.34 not risen materially; however, as the competition for
talent intensifies, that could change.
• Inventory levels for end customers and distributors:
As a result of the shortage, some customers may be • Capital expenditure levels: Current run rates are
hoarding or at least over-ordering. Once the shortage over $100 billion annually, and as the industry shifts
resolves, they could start working down excess into balance, stakeholders may start arguing for
inventories, leading to abruptly decreased demand. a reduction.
• Money and pressure from governments: There is • Unforeseeable global and regional disruptions: Significant
currently strong financial and political support for global/regional political, trade, or conflict events or
localization at both the national and regional levels environmental issues (typhoons, earthquakes, droughts)
of government, but semi companies should be on could cause supply chain shocks and disruption and
the alert for flagging support, as well as canceled or yet again radically alter chip companies’ strategies and
abandoned incentives. business models.
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2022 semiconductor industry outlook
Endnotes
1. World Semiconductor Trade Statistics (WSTS), “WSTS semiconductor market forecast fall 2021,” press release, November 30, 2021.
2. Michael Wayland, “Chip shortage expected to cost auto industry $210 billion in revenue in 2021,” CNBC, September 23, 2021.
3. Deloitte, Semiconductors – the next wave: Opportunities and winning strategies for semiconductor companies, April 2019.
5. Susanne Hupfer et al., “Women in the tech industry: Gaining ground, but facing new headwinds,” Deloitte Global TMT Predictions 2022, December 1, 2021.
6. S&P Global, “ESG Industry Report Card: Technology,” May 21, 2019.
7. Udit Gupta et al., “Chasing carbon: The elusive environmental footprint of computing,” Proceeding—27th IIIE International Symposium on High Performance Computer
Architecture, HPCA 2021 (pp. 854–67).
9. Brandon Kulik et al., 2021 Semiconductor Transformation Study: Top executive insights on transformations affecting the semiconductor ecosystem, a Deloitte study in
collaboration with Global Semiconductor Alliance (GSA), October 2021.
10. Jeanne Whalen, “How the global chip shortage might affect people who just want to wash their dogs,” Washington Post, May 2, 2021.
11. Calculation performed by Deloitte, based on data from 2021 Gartner® Forecast: Semiconductor Foundry Revenue, Supply and Demand, Worldwide, 3Q21 Update,
September 2021.
12. Ibid.
13. Don Clark, “Chip shortage creates new power players,” New York Times, November 8, 2021.
14. Sharron Epperson and Michelle Fox, “The ‘Great Resignation’ is burning out those who stay. Here’s what they can do,” CNBC, November 2, 2021.
15. WSTS press release. Global industry revenues were US$412.3 billion in 2019 and are predicted to be US$601.5 billion in 2022, or up 46%.
16. Elliot Silverberg and Eleanor Hughes, “Semiconductors: The skills shortage,” Lowy Institute, September 15, 2021.
17. Dashveenjit Kaur, “China is fighting a chronic talent shortage in the semiconductor industry,” Techwire Asia, October 25, 2021.
18. Semiconductor Industry Association (SIA), 2021: State of the U.S. semiconductor industry, 2021.
20. Moreover, engineers used the pandemic-driven disruption to reinvent their skills and specialize in new fields. Read further: Joe McKendrick, “Artificial intelligence and
automation’s paradox: More human talent needed to reduce need for human talent,” Forbes, May 19, 2021.
21. As part of the United States Innovation and Competition Act (USICA) of 2021, the government has committed to $5.22 billion worth of STEM student scholarships
(between 2022 and 2026), besides funding STEM workforce programs and bolstering university technology centers and innovation institutes. Read further: Silverberg
and Hughes, “Semiconductors: The skills shortage,” Lowy Institute.
22. Initiatives such as the MicroElectronics Training Industry and Skills (METIS) and the SEMI Foundation’s Global Workforce Development Initiative have established
multi-entity models to attract, train, and retain qualified engineers.
24. Deloitte analysis of public announcements from selected large public companies that make semiconductors.
25. Deloitte analysis of publicly announced United States, European Union, and Chinese initiatives.
26. Geektime, “Taiwan & Israel’s joint future within the semiconductor industry,” August 18, 2021.
27. Alex Irwin-Hunt, “In charts: Asia’s manufacturing dominance,” Financial Times, March 23, 2021.
28. Alan Crawford et al., “The world is dangerously dependent on Taiwan for semiconductors,” Bloomberg, January 25, 2021.
29. Cissy Zhou, “US-China tech war: Can China’s chipmaking drive save it from US technology embargo?,” South China Morning Post, September 28, 2020.
30. Pat Gelsinger, “Computer chip manufacturing is an investment in Europe’s technology leadership,” Politico, September 3, 2021.
32. Rich Nanda et al., “A new language for digital transformation,” Deloitte, September 23, 2021.
33. The Deloitte’s STS noted that nearly half of respondents plan to introduce usage, subscription, or outcome-based revenue models. Even “hardware” companies,
including those producing chips and equipment, are forging paths toward nontraditional models.
34. Joel Hruska, “Semiconductor shortage enters ‘danger zone’ as lead times rise,” ExtremeTech, May 20, 2021.
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